General Motors To Invest $5 Billion Into All-New Chevy Vehicle Family For Developing Markets

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Between the years 2015 and 2030, a significant majority of anticipated automotive industry growth will take place outside of mature markets. In other words, over the next 15 years, the biggest opportunities for growth in the automotive industry will take place in developing markets. To capitalize on that opportunity, General Motors has announced a $5 billion investment into developing an all-new Chevrolet vehicle family for said developing markets.

Chevy will create an all-new vehicle family that will replace several existing vehicles, thereby meeting the rapidly-changing demands of customers in these markets. The initiative’s first vehicle is slated for a 2019 launch, and the program is expected to “substantially improve competitiveness and profitability by delivering what customers expect in each market while taking maximum advantage of the benefits of global scale.”

“Strengthening Chevrolet’s position through this major investment is consistent with our global strategy to ensure long-term profitable growth in the markets where we operate”, said General Motors President Dan Ammann.

The new vehicle family will “feature advanced customer-facing technologies focused on connectivity, safety and fuel efficiency delivered at a compelling value,” said Mark Reuss, GM executive vice president, Global Product Development, Purchasing and Supply Chain. “It will be a combination of content and value not offered previously by any automaker in these markets that are poised for growth.”

The vehicle family is being developed by a multinational team of engineers and designers assigned to ensure each model is tailored to meet the expectations of customers in each market. The vehicles will be manufactured and sold in various markets, including Brazil, China, India and Mexico, and exported for sale to other important growth markets. GM has no plans to export the vehicles to mature markets such as the United States. A high level of localization of parts suppliers should drive significant savings over the life of the program, which is expected to grow to more than 2 million vehicles annually.

The new vehicle program will also see GM further expand its partnership with China’s SAIC Motor, where the two automakers will jointly develop the vehicle family’s core architecture (platform) and engine, which is expected to result in significant development cost savings and optimized total vehicle cost. The program represents another important step in GM’s previously-announced architecture consolidation plan.

“We have taken many decisive actions over the past few years to restructure our business in specific markets as part of our plan to become a more customer-focused company and to generate superior returns on our owners’ capital,” said Ammann. “This growth initiative is the next important step toward our goal of building the world’s most valued automotive company.”

Chevrolet will announced more information on the investment plans and all-new vehicle family in the future in each market.

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10 Comments

In other words, these vehicles will end up being sold as Boajan in China and Chevrolet globally.
China will probably generate enough profit to cover the program. I will miss GM using last generation Opel Corsa, Astra and Miriva models for markets like Brazil. Zafira sold far better than the much hyped Spin. Vehicles like last and current generation Cruze and Sonic shouldn’t be wasted. Chevrolet has been a leader in Brazil because they’ve avoided selling third world junk.

Though there is no official information about the exact vehicles that this program will spawn, I will say with utmost certainty that these vehicles will be sold in China as Chevrolets first and foremost. Perhaps they will be sold as Baojuns as well, but that’s not the primary purpose of the program. Think Chevrolet Sail, Onix, Cobalt, Agile, Spin (as you mentioned), and others.

In addition, I think there will still be room to sell some last-generation vehicles as “Classic” models in developing markets alongside these models… but this I don’t know for sure either.

I love the idea of the Spin. My second car was the Plymouth Colt Vista Wagon. I wasn’t a parent but got it because I was in my 30s and loved how it could do almost anything. (I was moving around a lot and it was like having a van. Except you could park it anywhere. And it was my first higher seat position vehicle.)

I can’t speak of the Spin (since I’ve never touched one) but know that something like it would sell like hotcakes in Los Angeles. There are immigrant families (Asian, Latino) that need six rows but can’t afford giant Traverses.

It would sell like hotcakes PROVIDED the dealers didn’t make the face. “Oh, you’re buying something smaller and inexpensive? I’d rather not waste my time.” THAT face. Received it over EVERY car purchase I’ve ever made.

John, these are not “great” by any stretch of the American or European car buyer. These are an entire level or two below the Cruze and Sonic/Aveo in everything; the same thing goes for the Spin. There is no market for this caliber of cars here. By comparison, the markets that will get this new family of vehicles also get the Cruze and Sonic as the “up-level” option, which is better and also more expensive.

John, the Orlando is what would sell like hot cakes in the area you describe. The Spin would get discarded as a piece of junk that it is in the “developed” markets, since it simply was never developed or manufactured to the same standards. It’s a low-cost, second-tier vehicle… and it would last a year in first-world markets.

To clarify — I didn’t mean these shinola boxes should specifically be released globally and replace Cruze, Sonic, etcetera. What I mean is that there should be a family of awesome small cars globally.

To clarify that — suppose Chevy nailed the Sonic. In ‘mature’ markets it would have better seats, more tech, bigger engine, etcerera. In emerging markets it would be ‘cheaper’ in almost every way, including a less powerful engine. But somehow a SOLID car in both markets.

The thing in my craw is that American car companies have no desire to sell solid small cars. They’re just there to inspire sales of bigger cars. It’s annoying.

Right idea, but $5 billion? That’s a lot of cars, at a low margin, to return profit on that investment. Rejigging the Cruze and Sonic platform etc, or even just sheet metal, and cram a different engine in and add new tech as it becomes cheaper to produce, sounds like a cheaper plan in the next 5-10 years then starting over from scratch.

Yes but is rejigging “old” vehicles going to do anything to entice new potential buyers to want to stay with GM?

I find the $5B for this venture less risky than the $12B for Cadillac.

The typical American business mentality is extremely short-sighted, with only interest being for immediate profit gratification that impact top management’s yearly bonuses. A lot of the problems of the auto industry are attributable to this mentality. Churn out the junk, make loads of money, and lose the buyer for probably forever.

At $15,000 a pop, that’s 330,000 vehicles required to break even on the $5 billion. Suffice to say that the volume of these vehicles over their lifespan will be in the vicinity of $1.5-2 million for GM and probably another 500,000-1,000,000 for its Chinese partners.